University Of Richmond Operations And Supply Chain Management Assignment Help - Limited Capacity

Question - Kitchen Magician, Inc. has assembled the following data pertaining to its two most
popular products.
Blender Electric Mixer
Direct Material $6.00 $11.00
Direct Labor $4.00 $9.00
Manufacturing overhead @ 16 per machine
hour $16.00 $32.00
Cost if purchasing from an outside supplier $20.00 $38.00
Annual Demand (Units) 20,000 28,000
Past experience has shown that the fixed manufacturing overhead component included in
the cost per machine hour averages $10. Kitchen Magician's management has a policy of
filling all sales orders, even if it means purchasing from outside suppliers.
1. If 50,000 machine hours are available, and management desires to follow an optimal
strategy, how many units of each product sho ...Read More uld the firm manufacture? How many units
of each product should be purchased?
2. With all other things constant, if management is able to reduce the direct material for an
electric mixer to $6 per unit, how many units of each product should be manufactured?
Purchased? ...Read Less

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